The WTI Crude Oil markets fell during most of the session on Friday, but as you can see bounced hard enough to form a hammer. Over the last five sessions, we have seen four hammers and one shooting star. With that being said, can you guess which direction I am favoring? I think that the market is already showing that the buyers are willing to step in and do whatever it takes to push prices higher. Because of this, I believe that you cannot sell this market and that anytime it dips, it represents a short-term buying opportunity.
I see that there is a large cluster above the $101 level, and that area of course will be difficult to break through. However, there’s really no way to think that this market is going to break down from this point, at least not without a major fight. Although we are running into significant resistance, I still believe that buying is the only way you can go.
Signs of strength in America?
While a lot of traders will be looking at a strengthening US dollar as a reason for oil markets to fall, I believe that it’s the exact opposite. This is because we starting to see signs of economic recovery in the United States, which of course has a massive effect on oil usage. That’s not to say that things are perfect everywhere, but we are starting to see better economic numbers out of the US, the UK, and even the EU. Those three economic regions alone can push the oil markets.
I think that even if we fall from here, the $98 level is probably about as far as the sellers will be able to get this market to move, as there just seems to be a massive basing underneath in order to keep this market somewhat bullish. Don’t get me wrong, this is going to be a serious fight all the way up to the $104 level, but I do think that ultimately the buyers come out ahead in a market that was very obviously oversold at one point.